AKC News // Bank of England cuts rates by 1.5% to 3%

The Bank of England today cut interest rates by 1.5% in its most dramatic attempt yet to rescue an economy on the brink of recession.

The unexpectedly large cut brings official interest rates to 3%. The move from the Bank's Monetary Policy Committee comes as the UK sinks further into economic gloom.

Most economists had forecast a half-point cut although several had changed their forecasts following a series of gloomy data.

Britain's central bank has never cut interest rates by more than half a point since it was made independent in 1997. The last time rates were slashed by a percentage point was in 1993, when the country was struggling to emerge from a recession.

Pain, which the year-long credit crunch has inflicted on the economy, is becoming more apparent as house prices tumble and job losses mount.
Britain's economy shrank 0.5% in the third quarter and many experts do not expect a recovery until 2010.

The rate cut is unlikely to prevent the economy slipping into the recession but will provide a boost to consumer morale and relief to homeowners with tracker mortgages.